Posted by: Mehul Srivastava on September 3, 2009

A fresh – and informal - round of negotiations began Sept 3 in New Delhi, hoping to make some movement towards a global free trade pact that could get signed in 2010, with trade ministers from 35 countries expected to spend the weekend hammering out texts of the agreement.

They might have trouble concentrating, though – protesters ringed the headquarters of the lobby group where the talks with the World Trade Organization members kicked off, and more protests are expected through the weekend. Close to 1,000 farmers holding placards protested peacefully in the heart of Delhi’s commercial district as Mercedes Benzes pulled up to the gates of the lobbying group.

And depending on who one listened to – the wooed, or the wooer - the talks were either close to complete, or stuck over irreconcilable differences.

The big holdouts, as earlier, are India and China, and this time around, it’s the turn of the trade ministers from these 35 countries to convince India that could benefit by join this free trade alliance.

That’s a tough sell, especially if one goes by the comments by the Indian Commerce Minister in the days leading up to the talks – he warned an industry lobby in Delhi that “In some quarters, it has been suggested that most issues have been settled and we are almost in end game,” he said. “However it would be apparent that there are still a few gaps and large number of unresolved issues.”

He was reacting to news reports in Delhi Sept 3 from the Australian Trade Minister Simon Crean, and the WTO Director-General Pascal Lamy that the negotiations were entering an “end-game,” using exactly the same phrase while talking to different publications.

The talks are a continuation of the so-called Doha round, that started off in 2001 and have had six follow-up meetings. The last round of talks fell apart in July 2008 when India and China joined hands to fight against what they called U.S.-led demands to end subsidies to farmers. This time around, the old disagreements have threatened to bubble to the surface, with Sharma referring to “historical distortions,” and denying that India was to blame for the collapse of talks in July 2008. India and China are pushing hard for the U.S. to make concessions on subsidies to American farmers – an equally tough compromise that remains a strong sticking point. “

The 2010 deadline remains in sight for now – and there’s a Sept 24-25 meeting of G-20 nations in Pittsburgh where the pact will feature heavily. Lamy, the WTO director general, pointed out that global trade fell nearly 10% in the 2008-09 fiscal year as countries raised trade barriers in response to the economic crisis, but that’s not as big a stick for India – it’s economy grew over close to 6% even in the midst of the worst economic crisis the world has ever faced, and its stock market is roaring, up 62% since January.

Reader Comments

Strategery

September 3, 2009 5:52 PM

It is refreshing to see that citizens in other countries understand the same thing that US citizens do: unrestricted "free trade" hurts the citizens of BOTH trading countries, and only the elite class receives the benefits. It is in the interest of every country to protect their food supply and the infrastructure related to national defense. Trade embargoes on food can, and have, been enacted. The USA relies on Chinese suppliers for military equipment and the Middle East for fuel!

Asan

September 4, 2009 1:08 PM

Don't drag China into this. It is only India that spoiled the Doha round, not China.

Newbie

September 5, 2009 7:31 AM

Isn't this great? USA and other Developed countries want the large emerging countries (BRIC) to take on more responsibility in the WTO talks and be accountable for the outcomes, yet it does not want to share authority.

Accountablity without authority does not work.

Rob

September 6, 2009 7:34 AM

India has been formally complaining to the WTO that member nations such as the USA are not doing enough to open up the services sector under Mode 4 of the GATS agreement. What this means in plain English is that India is complaining that the U.S. puts too many limits on the number of H-1B visas.

Indias ambassador and representative to the WTO, Mr Ujal Singh Bhatia, expressed his unhappiness with the United States in a statement to the free-traders in Geneva during previous WTO negotiations. In his opinion the U.S. is demonstrating a lack of political will by not allowing more of India's "highly educated" professionals to get visas.

"The revised offers of the USA and the European Union (EU) do not provide much scope for new market access in regard to Mode 4. The USA has made no changes in its Mode 4 offer whereas the EU has made modest improvements. Let me underline that the
demandeurs in the Services negotiations include a number of developing countries eager to harness the potential of the
burgeoning numbers of their highly educated and trained professionals. There is a growing perception of a lack of
political will, which aggravates the structural slowness of Services negotiations."

Under Mode 4 of the "General Agreement of Trades and Services" (GATS) agreement nations must allow unimpeded movement of "natural persons" so that corporations can move workers anywhere they want without the hassle of borders or immigration laws. Bhatia wants the U.S. to liberalise market access to India's services which in practical terms means that he wants all limits to H-1B and other guest-worker visas to be abolished. In Bhatia's opinion the United States should have open-borders.

"We would want the abolition of numerical quotas"

concerned citizen

September 6, 2009 12:47 PM

Agreed with every free trade agreement there should be proper conditions in place to monitor their abuse.

Free Trade Agreements are written without any concern to the environment and laborers in developing countries which is what the developed countries want since having those conditions will drive up costs of goods being imported (cannot pick up a $5.00 TOY at Walmart then - it will cost what it should appropriately cost). That's why we have polluted rivers and factories in China; the seven year old in India toiling in sweatshops and as soon as costs rise in one country manufacturers are looking for the next cheap country to produce their goods be it Africa or Vietnam.

Similarly United States and other developed countries should enforce proper labor laws while allowing professionals to come to do work. I.E., ensure those people are paying taxes, they are paid free market wages and they are paid full medical insurance and benefits. That will decrease the so-called attractiveness of "H1-B" visa holders.

Putting all these practices in places both in developed and developing nations will balance out the severe imbalances which exist in free trade agreements.

Unfortunately nobody wants to speak about choices from this perspective - they are busy hiding the truth. We have to continously be vigilant and ensure those who are negotiating and signing these FTAs are abiding by these guiding principles.

Strategery

September 6, 2009 7:29 PM

Rob, I'm not sure where you stand on this issue, but I will say this: India does not embrace "free" trade, and consequently, Europe and America should not either. American and European companies are routinely denied access to Indian markets, and India imposes tariffs on goods from these regions.

Thank God the WTO is just a Forum, and has no real ability to actually enforce its rules in SOVERIGN nations.

While trade disputes are pending, American companies are collapsing and the middle class is disappearing. Congress needs to work quickly to stop the hemorrhaging of jobs, the loss of industry (often important to national security), the displacement of American workers by immigrants, and the trade and government deficits that are destroying our economy and threatening our sovereignty.

@Strategery

September 8, 2009 10:43 AM

Wasn't it US and Western Europe that pushed for 'free trade' in the 80s? Now when it is clear that it cannot complete, suddenly 'free trade' is the culprit.

See what happens in 10 years. UN has just agreed to a call by the BRIC nations about the need to reduce dependency on USD and build a supra-national currency. Of course I expect US to block this development. But the fact is "an idea whose time has come cannot be stopped".

Henry L.

September 9, 2009 7:57 AM

Agreed with Strategery that every nation should have the right to protect their food supply and infracture related to national defense. "Free trade" is also arguably beneficial for the elite and large corporations. In todays world, I would think that would mean large western companies. Jobs have been lost due to shifting work to cheaper countries but I think most people don't realize that alot more jobs are lost due to automation. China lost more manufacturing jobs that most people realize. At the end of the day, the world is getting to be a more competitive place. We no longer can expect to have only high school education and make a comfortable living working at a unionized auto plant for an example. All have to be hyper competitive....scarry

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.